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Earnings Season Means Cluttered Mailboxes

July 9, 2013

Investors are starting to experience “earnings season.”  If you are an active trader, it is a significant time.  If not, then all it means is that your mailbox gets cluttered with weighty financial statements.

 

Day 52 Way too much mailAs a CPA and trained auditor, I cannot make sense of most of the reports in any amount of reasonable time.  When the statements arrive, I glance at the sales, profits, earnings per share, net worth and cash flow.  I also look at the details of the year’s changes in the other comprehensive income.  Then, I flip through the rest of the book and find dozens of pages of notes to financial statements.  For GE and IBM the notes are 54 and 62 pages.  There is also a myriad of additional verbiage, data, charts, discussions and analyses.  There is no way I am going to read these “books.”

 

I got to thinking about who actually reads them.  The statements serve a purpose for the SEC, stock analysts, investment managers, mutual funds and pensions acquiring shares, rating agencies, lenders and key management and company directors that need to study and understand them.  Those who should and do not, in my opinion, are being remiss in their responsibilities.

 

However, I don’t believe most individual investors read these statements to make investment decisions.  So, are the statements necessary?  For people like me, the statements provide some background or thinking points but it is more out of curiosity and general interest than investment purposes.

 

As to relevance for the individual investor – none!

2 Comments leave one →
  1. Robert Nagler permalink
    July 9, 2013 3:19 pm

    Hi Ed it’s great to get all the reports it gives me some thing to read and some of the
    report have great pictures
    Bob

  2. July 9, 2013 3:23 pm

    I’ll talk about the pictures Thursday.

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